Venerable Dutch Family Office Launches U.S. Buyout Fund

Bregal Investments Inc., long an investor in buyout funds, has decided to launch a U.S. fund of its own, marking the next stage in the evolution of a firm that began as the family office for a pair of nineteenth century Dutch clothiers.

Bregal Investments announced this month that it is forming Bregal Partners LP, which the firm described as a mid-market private equity fund with $500 million of committed capital. To launch the fund, the firm tapped Robert Bergmann and Scott Perekslis to be its managing partners.

Bergmann and Perekslis previously worked together at New York-based Centre Partners Management LLC, a firm that has managed money for Bregal Investments

Bregal Partners LP is actually the third direct investing vehicle for Bregal Investments, the corporate investment arm of Cofra Holding AG, a sixth-generation family holding company based in Switzerland. Bregal Investments operates a British buyout shop—Bregal Capital LLP—which is investing out of its third fund, a €1 billion ($1.4 billion) 2010-vintage pool. It also operates a North American energy firm—Birchill Exploration LP, a Canadian oil gas exploration firm that was formed in 2007.

Cofra Holding is the money manager for the Brenninkmeijer family, whose fortune traces to a textile wholesaling operation in the Netherlands, founded in 1841 by two brothers, Clemens and August Brenninkmeijer. (Twenty years later, they launched a retail clothing business; today, the C&A chain operates in 18 European nations, two in Latin America and China.)

The family is one of the wealthiest in the Netherlands, with a fortune estimated by Forbes magazine in 2002 at $4.2 billion. And family members remain active in the management of a sprawling empire that includes real estate management, financial services and renewable energy.

Louis Brenninkmeijer, co-chairman of Bregal Investments, was the one to announce the formation of Bregal Partners. “We are delighted to be able to announce today the next step in the evolution of our global private equity investment platform,” Brenninkmeijer said in the firm’s Feb. 7 press release. “We are very pleased to be partnering with Bob and Scott, who we have known and worked with for more than eight years, and we look forward to their assistance in building another important leg to our business. Our relationship with Centre will continue, and we remain committed to their future success.”

Centre Partners Connections

Bergmann and Perekslis said they had worked with Bregal Investments for about eight years while at Centre Partners and that the Bregal opportunity was simply irresistible. “It was a challenge we were interested in taking on,” Bergmann told Buyouts. The pair had worked together at Centre Partners for more than 20 years, most recently serving as senior partners at the firm.

Their departure from Centre Partners was amicable, he said. “We think they’ll continue to have lots of success.” It is possible that Bregal Partners will work with Centre Partners on deals in the future.

At Bregal Partners, the two will pursue a strategy similar to what they had at Centre Partners, focusing on control investments in mid-market North American consumer companies, including food and beverage, health care and energy services. The firm expects typically to write checks of up to $50 million to invest in companies with $20 million to $100 million of EBITDA.

Under the Bregal umbrella, Bergmann and Perekslis join a team of about 30 investing professionals, said Quentin Van Doosselaere, a managing director at Bregal Investments. “Our investment platform is evolving into a more integrated investment business. We’re in the middle of that evolution,” Van Doosselaere told Buyouts. “We have the luxury to have the backing of long-term capital. We believe the best way to exploit that is by an integrated investment process to create a platform that survives the simple sponsorship of third-party funds.”

The development of a direct investment business is part of the firm’s long-term strategy, Van Doosselaere said. “It is the difference between being a passive investor and creating your own business.” The firm also plans to continue to invest with outside sponsors, he said.

Bregal Investments operates a pair of private equity investment businesses—Bregal Direct Private Equity and Bregal Private Equity Partners. Bregal Direct Private Equity makes large commitments to a small group of buyout sponsors and works closely with them on direct investments; it made a $650 million commitment to Centre Partners’s latest, $783 million fund. Bregal Private Equity Partners, meanwhile, is an international fund-of-funds operation, headed by Chuck Flynn. Bregal Private Equity Partners’s portfolio consists of a collection of primary fund investments, co-investments and secondary investments; it makes commitments of €20 million to €70 million, with a goal of deploying €1.2 billion to the asset class while building 25 to 30 long-term general partner relationships in Europe and the United States.

Van Doosselaere said the fund-of-funds business, a “cornerstone” of the firm’s operation, will be unaffected by the launch of the direct U.S. private investment platform. “It is a slightly different platform from the rest, a solid anchor for the overall business.”

But the mix of investments could change. In particular, the private equity secondaries business, in which the firm acquires fund commitments from other LPs, is in an unsettled period. “Obviously there has been some dislocation in the market since 2008. Some organizations don’t have the financial resources they used to have before the financial crisis,” Van Doosselaere said.

In the wake of the crisis, investors are reassessing their long-term financial needs, and the industry is only beginning to digest the regulatory changes that have resulted, such as the Dodd-Frank Act in the United States and the international Basel III accord setting new capital requirements for banks. As a result, the outlook for secondaries is murky, he said. “Has the market shrunk or not? I think it’s too early to tell.”

Beyond the realm of private equity, Cofra Holding is the parent company of the C&A retail stores. Cofra’s real estate arm, Redevco, manages not only its own retail properties, but also has branched into properties occupied by other retailers as well as office buildings and warehouses. The Redevco Web site says its portfolio includes more than 800 buildings, with an estimated value of €7.2 billion. And Cofra is a venture investor through the Entrepreneurs Fund, which has an investment horizon that extends to the year 2060.

In addition, its C&A Bank, chartered in Germany, offers various savings and revolving credit accounts under the brand C&A Money. Last August, Bregal Capital, the British firm, entered into exclusive talks with the Irish financial services company IFG Group about a possible takeover that could have led to a €231 million deal, as Reuters reported at the time. But those talks ended in September, said IFG, a provider of financial advice and pension administration services in the U.K. and Ireland.

“We have absolutely no intent to become a bank,” Van Doosselaere told Buyouts. “We are managing family wealth. That is our mission.”

By Steve Bills